Stephens raises Valvoline stock price target to $44 on strong summer driving season

Investing.com - Stephens raised its price target on Valvoline (NYSE:VVV) to $44.00 from $40.00 on Tuesday, while maintaining an Overweight rating on the stock. The company, which currently generates annual revenue of $1.67 billion and maintains a healthy gross margin of 38.29%, has shown strong financial performance with revenue growth of 9.56% over the last twelve months.

The research firm cited a strong summer driving season and gross margin opportunities as factors that could make their current estimates conservative. April vehicle miles traveled increased 1.5% year-over-year, compared to the 0.6% increase seen during Valvoline’s fiscal second quarter of 2025. According to InvestingPro, the company is trading at an attractive P/E ratio relative to its near-term earnings growth potential, with seven additional exclusive insights available to subscribers.

Oil prices decreased 23.4% year-over-year compared to Valvoline’s fiscal third quarter of 2024, potentially benefiting the company’s cost structure. Stephens noted that company-operated same-store sales experienced a slight slowdown in the fiscal second quarter of 2025, driven by lapping non-oil change initiatives and pricing actions.

The firm’s estimates include franchise locations following a similar pattern, with a slight slowdown in franchise same-store sales. Stephens also examined same-store wait times, correlations with personal consumption expenditures, and non-oil change trends in their analysis.

Stephens projects that Valvoline’s EBITDA growth will turn positive in the fiscal fourth quarter of 2025, followed by continued growth in fiscal year 2026, supporting their view of VVV as "an attractive investment opportunity."

In other recent news, several analysts have updated their outlooks on Valvoline. RBC Capital has reiterated its Outperform rating, setting a price target of $48, and anticipates an earnings per share acceleration by fiscal year 2026. They project a 5.6% increase in same-store sales for the third quarter, aligning with consensus estimates, and forecast an adjusted EBITDA of $124 million. TD Cowen has raised its price target to $45, maintaining a Buy rating, though they have slightly lowered their third-quarter earnings per share forecast to $0.46, which remains above consensus estimates. CFRA has increased its price target from $31 to $42, citing promising sales and margin expansion prospects, while maintaining a Hold rating. Goldman Sachs has assumed coverage with a Buy rating and a $45 price target, viewing Valvoline as a strong operator in a fragmented market. They also noted the company’s recent refranchising transactions, which they believe add value. These updates reflect a generally positive outlook from analysts, with varying expectations for sales growth and profitability improvements.

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